GBPJPY Positioning For Correction?

British Pound rocketed higher recently against the Japanese Yen, but it may be setting up for a minor decline in the near term.

There is a support trend line formed on the 4-hours chart of the GBPJPY pair, which may be broken moving ahead for a short-term correction.

In the UK today, the Gross Domestic Product released by the National Statistics posted an increase of 0.4% in Q1 2016.

In terms of the yearly change, there was a rise of 2.1%, more than the forecast.

Technical Analysis

There were good gains in the British Pound versus the US Dollar and the Japanese Yen recently. The GBPJPY traded with a positive mood, and traded above the 162.00 level. However, the pair is currently testing a support trend line formed on the 4-hours chart.

There is a chance of the pair breaking the support area, and moving down. A break below it may take the pair towards the 38.2% Fib retracement level of the last leg from the 156.52 low to 162.80 high.

On the upside, an initial resistance is near 162.80, which may act as a barrier for more gains.

UK GDP

Today in the UK, the Gross Domestic Product, which is a measure of the total value of all goods and services produced by the UK was released by the National Statistics. The forecast was slated for a rise of 0.4% in the GDP Q1 2016, and the outcome was as expected when we consider quarterly change.

However, in terms of the yearly change there was a rise of 2.1%, which was more than the forecast of 2%. The report stated that “In Quarter 1 (Jan to Mar) 2016, GDP was estimated to have been 7.3% higher than the pre-economic downturn peak of Quarter 1 (Jan to Mar) 2008. From the peak in Quarter 1 (Jan to Mar) 2008 to the trough in Quarter 2 (Apr to June) 2009, the economy shrank by 6.1%”.

The GBPJPY is trading in the bullish zone, but we cannot deny a possibility of a minor correction in the short term.

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